By Christine Graf

Of the approximately 675,000 CPA’s in the United States, less than one percent are certified to practice as forensic accountants. In addition to investigating financial crimes, forensic accountants work with companies to develop internal controls intended to prevent and detect these types of crimes. 

While many business owners believe that it is the job of internal or external auditors to detect financial crimes, that is not the case. The job of an auditor is to ensure that a company is adhering to generally accepted accounting principles (GAAP), the default accounting standard used by companies based in the United States. 

The savings and loan scandal of the 1980s and 1990s was a driving force behind the creation of the field of forensic accounting, but it was Internal Revenue Service CPA Frank Wilson who is considered the father of forensic accounting. In 1930, after reviewing more than two million documents, Wilson found evidence that notorious mobster Al Capone has committed tax fraud. The following year, after being found guilty, Capone was sentenced to 11 years in prison.

During the past decade, the field has evolved, with firms specializing in forensic accounting opening their doors throughout the country. One of these firms, FAZ Forensics, is located at 268 Broadway in Saratoga Springs.

“We specialize in forensic accounting and valuation work mostly in a litigation environment,” said partner Stephen Ferraro. “We’ve all done traditional accounting and tax work, but now we focus 100 percent in this area.”

FAZ Forensics was founded seven years ago after two CPA firms that had merged decided to split. 

“When that happened, our forensic group went independent,” he said. “At the time, there were six of us who spun off and started FAZ, and we currently have 16 people.”

By Christine E. Taylor, Esq.

As of January 1, 2024, businesses across the United States are now burdened with an additional filing obligation due to the implementation of the Corporate Transparency Act (CTA). This legislation mandates that businesses not subject to an exemption must file a Beneficial Ownership Information Report (BOIR) with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). 

     Understanding the Reporting Timeline; 

For businesses in existence before January 1, 2024, the clock is ticking as they must file their BOIR by January 1, 2025. Meanwhile, new entities created or registered in 2024 or later only have a 90-day window to submit the report to FinCEN. Businesses should not wait; there is an urgent need for businesses to familiarize themselves with the requirements imposed by the CTA and act promptly to ensure compliance.

       Applicability For Business Entities

The CTA casts its regulatory net wide, applying to both limited liability companies and corporations throughout the U.S. Regardless of size or industry, companies falling within these categories are obligated to adhere to the reporting requirements set forth by the legislation. The CTA provides 23 exemptions from reporting requirements. Companies meeting any of these exemptions are relieved from the obligation to submit a BOIR to the CTA, offering a degree of flexibility within the regulatory framework. Exempt entities include investment companies, banks, insurance companies, tax-exempt entities, large operating companies, and more. Large operating companies are classified based on three criteria: having over 20 full-time employees in the United States, maintaining a physical office in the U.S., and filing a federal income tax return or information return in the U.S. for the preceding year, showcasing gross receipts or sales exceeding $5 million, excluding those from sources outside the United States. 

By Susan Elise Campbell

Accounting firms country-wide are having as much trouble as other businesses finding enough people to hire, according to Paul Dowen, CPA, a principal of Whittemore, Dowen & Ricciardelli, LLP. WDR is headquartered in Queensbury and provides accounting, advisory and tax services primarily for small businesses.

“Even the IRS can’t find enough people to help resolve tax issues,” said Dowen. “You can rarely get someone to answer the telephone.”

One reason for the shortage of qualified accountants may be the five years or 150 credit hours it takes to earn the degree.

“College students weighing their options wonder if they really want to take on an extra year of schooling and the extra debt,” he said.

For the last three years, the Covid years, Dowen and his associates have had to turn down income tax preparation for individuals, referring them and some smaller businesses who were not already clients “to the big box companies.”

“We’ve had to be selective, which we never had to do before,” he said. “We would be forced to raise our fees to price out those smaller returns, even though we would like to help them out.”

The client base at WDR is primarily businesses ranging from $250,000 to $2.5 million in gross receipts. Dowen said his firm wants to know each client well, “not just crank out tax returns.”

“It comes down to the relationship,” he said. “I want to know who you are, what are your life goals. Do you want to get ready to retire, sell your business or turn it over to family members?” 

“I want the relationship for your lifetime, and I want to make sure you’re making money,” he said. “Not all accountants take the time to build that relationship.”